KEARNEY — It was pogo sticks vs. three-legged stools Thursday night at The World Theatre as a pair of Nebraska tax experts pitched dueling state reform proposals.
State Sen. Steve Erdman of Bayard backed the pogo stick tax strategy because he believes a single tax — what Erdman calls the EPIC Consumption Tax — would generate enough revenue it would eliminate the need for all other local and state taxes.
Advocating for the three-legged stool, Jim Smith of Omaha said a tax modernization plan would rely on the three traditional revenue sources — sales, income and property taxes. However, how much those sources generate would be tweaked. The goal of the overhaul, Smith said, would be to boost Nebraska’s attractiveness to younger people, ages 18-34, while giving the state a healthier tax environment for business by lowering property taxes.
Erdman has been promoting his consumption tax ideas in the Legislature and across Nebraska.
Smith and Erdman have been sharing the podium on the tax reform tour. Smith is the chief strategy officer for the Platte Institute and president of Blueprint Nebraska. As the name suggests, Blue Print Nebraska has drafted an assortment of strategies and goals during the past several years for the future of the state.
Erdman and Smith’s tax reform sessions, like Thursday’s event at Kearney’s World Theatre, come as Nebraskans seek solutions to the state’s heavy reliance on property taxes.
“As president of Blueprint Nebraska over the past three years, I worked alongside Nebraskans in business, government and community life to identify solutions to the state’s economic challenges,” Smith said.
“Throughout the Blueprint Nebraska process, people and businesses told us Nebraska’s tax structure was a top-three economic concern,” he said. “Blueprint Nebraska’s Tax Modernization plan updates Nebraska’s tax code and creates a foundation for economic competitiveness and growth.”
The Blueprint Nebraska plan proposes to reduce state income tax rates, fully eliminating state income taxes on earnings up to $50,000, or $100,000 for married couples filing jointly. Blueprint Nebraska also is geared to increase property tax relief by an additional $2 billion during the next decade, and eliminate Nebraska’s inheritance tax.
Those changes would be paid for by eliminating many sales tax exemptions, income tax deductions and corporate tax credits. The current sales tax rate would remain the same.
Erdman’s EPIC Consumption Tax proposal proposes to eliminate Nebraska’s income, property and inheritance taxes.
To offset these changes, the consumption tax also would eliminate most sales tax exemptions and require an increased tax rate on the purchase of taxable goods and services.
Historically, Nebraska’s sales tax has targeted the sale of goods but not services.
Erdman’s plan would change that.
“Ever since I became a state senator my No. 1 goal has been to reduce our state’s property tax burden,” Erdman said. After trying to reform the way agricultural land gets valued for tax purposes and after pushing a plan to reduce property taxes by 35%, I came to the conclusion that Nebraska’s tax system was broken and needed to be replaced with a better system.”
He said the EPIC Consumption tax replaces the income tax, property tax, sales tax and inheritance tax with a new tax on the retail sale of services and new goods.
“Because the EPIC Consumption Tax comes with a monthly pre-bate, which covers everyone’s tax burden up to the federal poverty rate, the poor are rendered harmless and everyone gets treated fairly,” Erdman said.